macquarie korea infrastructure fund · r highlights solid financial and traffic results traffic...
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MACQUARIE KOREA INFRASTRUCTURE FUND
August 2011
General Presentation
O
DISCLAIMER
This presentation is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in Macquarie Korea Infrastructure Fund (“MKIF”), the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary.
MKIF and Macquarie Shinhan Infrastructure Asset Management Co., Ltd.(“MSIAM”) are not authorised deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia) and their obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of MKIF/ MSIAM.
Information, including forecast financial information, in this presentation should not be considered as a recommendation in relation to holding, purchasing or selling shares, securities or other instruments in MKIF. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts by their very nature, are subject to uncertainty and contingencies many of which are outside the control of MKIF. Past performance is not a reliable indication of future performance.
This presentation is not an offer for sale of the securities of MKIF in the United States or in any jurisdiction where any offer, sale or solicitation in respect of such securities is not permitted. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended, or in any jurisdiction where such offer or sale is not permitted. MKIF does not intend to register any portion of any contemplated offering in the United States or to conduct a public offering of securities in the United States
Not for distribution in the United States or in any jurisdiction where any offer, sale or solicitation in respect of the contemplated securities is not permitted.
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Any securities will only be available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire any securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
FORWARD LOOKING STATEMENT
This presentation contains forward-looking statements, in particular, under the heading “Business Overview”. All forward-looking statements are our management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
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CONTENTS
1
5
6
7
Highlights
Financial results
Underlying asset performance
2 Business Overview
11
12
13
14
15
16
MKIF history
Share information
Corporate structure
Portfolio
Landmark assets
Long-term concession period
Key Results
17
18
19
20
21
Government revenue support
Debt profile
Capital restructuring opportunities
Distribution
Conclusion
3
23
24
25
26
27
28
Financial position statements
Profit and loss statements
Cashflow statements
Portfolio
Operating performance by asset
Minimum revenue guarantee summary
29
30
31
32
33
Management fees
Macquarie Funds Group
Macquarie worldwide investments
Macquarie Infrastructure and real assets (MIRA)’s competitive advantage
MIRA infrastructure overview
Appendices
8
9
Newly opened assets
Capital management initiatives –1H 2011
Key Results
R
HIGHLIGHTS
SOLID FINANCIAL AND TRAFFIC RESULTS Traffic volume and revenue1 up 7.4% and 7.4% respectively in the first half 2011, from prior corresponding period (pcp) Weighted average traffic volume vs. Concession Agreement forecasted volume of 78% for the newly opened assets2 in 2Q 2011 Normalised revenue and net income3 increased by 6.2% and 2.9% respectively in the first half 2011 on pcp
SUCCESSFUL OUTCOME ON THE CAPITAL MANAGEMENT INITIATIVE Completed the 3rd Tranche securitisation of the interest receivable on the subordinated loans provided to Cheonan-Nonsan
Expressway, bringing forward KRW 20.6bn of trapped cash to MKIF KRW 500 billion MKIF level debt refinanced with a significantly cheaper (-215bps per annum)4 and longer debt (+2.5 years)4
REMAINS FINANCIALLY HEALTHY WITH CONSERVATIVE CAPITAL POSITIONS (as at 30 June 2011)
MKIF domestic credit rating has been notched up to AA (stable) from AA- (stable) Continued de-gearing of asset level debt with average maturity of 8.9 years Proportionately consolidated cash balance of circa KRW 377bn (MKIF level cash balance of KRW 121bn) MKIF net debt of KRW 271 billion with no external financing needs until May 2016 Proportionately consolidated gearing5 of 49% with 66% of interest obligations either fixed or hedged6 for next 12-months
1. The weighted average growth rates in traffic and revenue are weighted by reference to revenue and calculated based on MKIF’s percentage ownership interest in each concession company 2. Yongin-Seoul Expressway, Seoul-Chuncheon Expressway, Seoul Subway Line 9 Section 1 and Incheon Grand Bridge3. Excludes one-off capital gains in 1H2010 and 1H20114. Weighted average basis on outstanding debt balance (91day CD rate of 3.4%)5. Gearing = MKIF Net Debt/( MKIF Net Debt + MKIF market capital(3-month average)), where MKIF Net Debt = Proportionate net debt from assets + Corporate net debt. Excludes shareholder loans 6. Hedging (Fixed or swapped to fixed) = Proportionately consolidated MKIF net debt adjusted for fixed or swapped debt / Proportionately consolidated MKIF net debt
S
FINANCIAL RESULTS
1H 2011 1H 2010 % change
Revenue 79,199 81,157
Interest income 78,577 74,007
Gain (loss) on sale of investment 622 1 7,148 2
Other income (loss) - 2
Expense 32,091 28,822
Management fee 11,969 11,229
Interest expense 12,433 13,183
Other expense 7,6893 4,410
Net income 47,108 52,335
EPS (KRW)4 142 158
Normalised Net income5 46,486 45,187
Normalised EPS (KRW)5 140 136
1. One-off gain from 3rd tranche securitisation of interest receivables on the subordinated loan provided to Cheonan-Nonsan Expressway 2. Includes one-off gains from (i) 2nd tranche securitisation of interest receivables on the subordinated loan provided to Cheonan-Nonsan Expressway of KRW249mil and (ii) divestment of the subordinated loan
provided to Seosuwon-Osan-Pyungtaek Expressway of KRW6,899mil3. Mainly one-off transaction related expenses including KRW 5.1bil of write-down of remaining prepaid expenses from MKIF debt refinancing in 2009 4. Based on the number of shares outstanding of 331.5 mil shares5. Excludes one-off transaction related gains
(Unit: KRW mn)Unaudited, non-consolidated financial information
6.2%
2.9%
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1. On a weighted average basis based on revenue size of each asset and the MKIF’s equity interest in each concession company. 2. Operation period of each concession company on a weighted average basis based on respective commitment amount
1H 2011 2Q 2011Average daily traffic volume Average daily traffic revenue Average daily traffic volume Average daily traffic revenue
Vehicles/day % change
on pcpKRW
thousand/day% change
on pcpVehicles/day
% change on pcp
KRW thousand/day
% change on pcp
Incheon International Airport Expressway 50,109 (4.2%) 314,555 (4.2%) 51,920 (4.3%) 324,204 (4.3%)
Baekyang Tunnel 69,725 3.3% 50,667 3.2% 71,433 3.3% 51,899 3.3%
Gwangju Second Beltway, Section 3-1 34,915 9.4% 30,961 9.6% 36,679 9.0% 32,583 9.3%
Gwangju Second Beltway, Section 1 36,345 5.3% 37,702 5.9% 38,418 5.2% 39,864 5.7%
Woomyunsan Tunnel 26,561 5.3% 46,049 5.4% 27,562 3.7% 47,794 3.7%
Cheonan-Nonsan Expressway 39,638 10.1% 302,913 9.8% 41,870 11.2% 320,147 10.3%
Soojungsan Tunnel 41,964 4.7% 31,491 4.5% 42,871 5.3% 32,170 5.2%
Deagu 4th Beltway East 19,768 3.3% 19,824 3.3% 20,491 2.7% 20,549 2.7%
Machang Bridge 14,851 8.6% 26,765 8.9% 15,779 9.4% 28,405 9.5%
Yongin-Seoul Expressway 60,431 23.9% 97,323 24.3% 63,645 19.6% 102,502 19.9%
Seoul-Chuncheon Expressway 35,256 11.7% 204,625 12.5% 38,366 11.0% 223,267 11.5%
Seoul Metro 9 190,371 13.1% 134,215 10.7% 197,490 13.2% 138,762 11.0%
Incheon Grand Bridge 26,239 10.4% 130,813 10.9% 27,126 4.7% 134,815 4.0%
Weighted average growth rate 7.4% 7.4% 7.0% 6.7%
TRAFFIC VOLUME GROWTH1
7.4%
TRAFFIC REVENUE GROWTH1
7.4%
PORTFOLIO AGE2
5 years
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1. During 2st quarter 2011, on a weighted average basis based on total commitment amount and average daily traffic2. Weighted average daily traffic during 1H 2011 over 1H 2010
67.0%4.0%4.7% 19-Oct-09Incheon Grand Bridge (IGB)
96.3%11.0% 13.2% 24-Jul-09Seoul Subway Line 9, Section 1 (SM9)
81.2%11.5% 11.0% 15-Jul-09Seoul-ChuncheonExpressway (SCE)
76.1%19.9% 19.6% 01-Jul-09Yongin-Seoul Expressway (YSE)
% of CA forecast traffic
volume
Traffic revenue growth on pcp
Traffic volume growth on pcp
Operation commencement
Asset
QUARTERLY TREND OF TRAFFIC VOLUME 2Q 2011 TRAFFIC PERFORMANCE
29%
% OF PORTFOLIO
77.5%
% OF CA FORECAST TRAFFIC VOLUME1
14.7%
TRAFFIC VOLUME GROWTH2
(Vehicles/day) (Initial boarding/day)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
220,000
YSE (LHS) SCE (LHS) IBC (LHS) SM9 (RHS)
V
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1. Assuming the market rates of the ‘AA-’ rated Korean corporate bonds as at 14 May 2009 2. Weighted average cost of debt for MKIF’s total outstanding borrowing
DESCRIPTION
TRANSACTION RATIONALE
PRICING
CASHFLOW
Securitisation of subordinated debt interest receivable (3rd tranche)
CHEONAN-NONSAN EXPRESSWAY
Refinancing of MKIF-level debt
3rd tranche securitisation of MKIF’s interest receivable on the subordinated loans provided to Cheonan-Nonsan Expressway (part of 8 asset-backed securitised bond program between 2009~2015 with a combined face value of KRW 157.2bn1
Total issuance amount of KRW 21.1bn issued at 6.40%
KRW 250bn aggregate principal amount of unsecured bonds consisting of
−W60bn 5-year bond (“Tranche 1-1”) at a fixed rate of 4.57%−W190bn 7-year bond (“Tranche 1-2”) at a fixed rate of 4.97%
A new 5-year W250bn corporate credit facility − Interest rate from CD+400bps (floating rate tranche) and 7.2%
(fixed rate tranche) to CD+270bps (fixed tranche removed) −Maturity extended to June 2016
Releasing trapped cash Attractive pricing
Lowering borrowing cost and extending maturity Access to new source of capital
Demonstrates market’s strong appetite for MKIF’s assets− Competitive pricing despite the unusual structure of
callable (with lock-up period) zero-coupon ABS bonds
Attractive pricing relative to the benchmark rates- AA credit rating for MKIF (both bonds and credit facility) − The weighted average cost of MKIF’s total borrowing reduced
by circa 215 bps2
− Weighted average maturity extended by +2.5yrs− Exposure to floating interest rate reduced by more than half
Immediate net cash inflow of KRW 20.6bn Expected annual cash savings of W7~9bn over next 5 years
BUSINESS OVERVIEW
NN
MKIF HISTORY
• Capital raising of KRW 1.26 tn until the listing • Captured attractive asset portfolio underpinned by significant
government revenue and capital protections
1. Private Participation in Infrastructure Act (PPI Act) defines infrastructure sectors including roads, railways, ports, energy, airport, communication, water resources, etc.2. A joint venture company between Macquarie Group and Shinhan Financial Group.
Market Leader
Promulgated PPI Act
Establishment Listing
A key component in Korean government’s initiative to expand Infrastructure in Korea, introduced strong government supports to private participation in investment
Asian economic crisis Identified the attractive opportunities available
Active fund raising and deal participation
2000 2001 2002 2003 2004 2005 2006 2007 2008Late 90s 2009
Capital raising of KRW 1.26tn until the listing Captured attractive asset portfolio underpinned by significant
government revenue and capital protections
Capital raising of KRW 582.5 bn through IPO Dual listed on KRX and LSE
To invest in infrastructure assets in Korea as defined under PPI Act1
MANDATE
14 assets, KRW 1.77tn (12 toll roads, 1 subway &1 port)
INVESTMENTS
To create value through active capital/portfolio management and to
provide stable distributionsOBJECTIVE
Macquarie Shinhan Infrastructure Asset Management Co., Ltd.2
ASSET MANAGER
2010 2011
NO
SHARE INFORMATION
1. Based on the share price as of 30 June 20112. 3-month average daily turnover3. Calculated based on the exchange rate as at 30 June 2011 4. Source: Financial Supervisory Service
As at 30 June 2011
TOP SHAREHOLDERS4
7.2%3. Korea Life Insurance
1. Military Mutual Aid Association 11.8%
2. Shinhan Financial Group 11.2%
4. Korea Government Employees Pension Services 5.4%
5. Lazard Group of Companies 5.0%
6. Capital Group of companies KDB Life Insurance 4.9%
7. KDB Life Insurance 4.5%
8. Macquarie Group 4.4%
SHAREHOLDER BASE
Domestic institutions57.9%
DomesticRetail
19.4%
International investors 22.7%KRX -088980.KS /
LSE – MKIF.LIEXCHANGE
KRW 1.6 trillion (US$ 1.5 billion)3
MARKET CAP1
366,574 shares(US$ 1.7 million)3
DAILY VOLUME2
NP
– External fund manager– JV between Macquarie & Shinhan
Financial Group– Managed under Macquarie’s global
policies and procedures
Macquarie Shinhan Infrastructure Asset Management Co., Ltd.
Management AgreementMKIF
Invests in 14 Concession companies
OPERATING – 13 assets CONSTRUCTION – 1 asset
Toll roads (12) Subway (1) Port (1)
1. Investments having a total par value of KRW 100mil or less are subject to withholding tax of 5.5%. Investments having a total par value over KRW100mil are subject to 15.4% until December 2012.
Active manager of the invested companies through management participation
Corporate tax exempted when MKIF distributes more than 90% of its annual net income
Korean retail residents benefit from a lower distribution withholding tax1
Invests in the form of: Equity Subordinated debt Senior debt
Receives: Interest income Dividend
CORPORATE STRUCTURE
As of 30 June 2011
NQ
mloqcliflN
5.1%
6.4%
7.7%
5.0%
6.8%
15.2%
1.1%
10.7%
0.2%
6.2%
7.6%
9.2%
4.2%
14.6%
Port14.6%
Subway4.2%
Toll-road81.2%
Yongin-Seoul Expressway
Incheon Grand Bridge
Seoul Subway Line 9, Section 1
Seoul-ChuncheonExpressway
MachangBridge
Busan New PortPhase 2-3
Gwangju 2nd
Beltway, Section 1
Gwangju 2nd Beltway, Section 3-1
Incheon International Airport Expressway
Woomyunsan Tunnel
Cheonan-NonsanExpressway
Daegu 4th
Beltway, East
SoojungsanTunnel
Beakyang Tunnel
As at 30 June 2011
Portfolio Composition by Asset1 Portfolio Composition by Phase and Type
1. Based on commitment amount
29.3%Ramp up
40.2%
14.6% 15.9%
Senior debt
14.6%
Equity
35.3%
Sub debt
50.1%
Construction
Growth
Mature
NR
LANDMARK ASSETS
NS
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CONCESSION TERM VS. GOVERNMENT REVENUE SUPPORT PERIOD
Revenue Support Duration 2 Concession Term 3 Early Termination Support4
Weighted Average Concession Term
24 years
Weighted Average Revenue Support
12 years
Present
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
(L)Kwangju 2nd Beltway, Section 1
(L)Baekyang Tunnel
Relevant Authority(C) Central government (L) Local government
As of 30 June 2011
(C)Busan New Port Phase 2-3
(C)Yongin-Seoul Expressway
(C)Incheon Grand Bridge
(L)Seoul Subway Line 9, Section 1
(C)Seoul Chuncheon Expressway
(L)Machang Bridge
(L)Daegu 4th Beltway, East
(L)Soojungsan Tunnel
(C)Cheonan Nonsan Expressway
(L)Woomyunsan Tunnel
(L)Kwangju 2nd Beltway, Section 3
(C)Incheon International Airport Expressway
1. Revenue support and termination payment provisions vary for each concession 2. Revenue support until at least 2023 with weighted average support remaining of about 12 years (excluding Busan New Port Phase 2-3) 3. Concessions last at least until 2035 with weighted average life remaining of over 24 years4. Concession companies have the right to receive payments if the relevant concession agreement is terminated prior to expiration of the concession term, including termination due to events attributable to
the concession company or the government body or for events of force majeure
NT
Revenue Cap1
MRG1
Forecast Revenues2
Government bodies compensate the shortfall
Relevant government authorities extract the excess portion
Actual Revenue
1. MRG and revenue caps vary across assets2. Forecast revenues set out in the Concession Agreement3. In three of 13 MRG assets, no revenue guarantee applies if actual revenue are below 50 % of the toll revenue forecast
Revenue
GOVERNMENT REVENUE SUPPORT1
MRG and Revenue support for 13 of MKIF’s 14 assets3
Real and inflation-linked revenue support
MRG line tracking the forecast revenue line (typically 80~90% below forecast revenue)
No history of Korea sovereign default
Korea sovereign rating as of May 2011:
− S&P : A (Stable)
− Moody’s : A1 (Stable)
Details for the government revenue support by each asset attached – Slide 28
Conceptual Diagram
MINIMUM REVENUE SUPPORT MECHANISM
As of 30 June 2011
NU
DEBT PROFILE
1. Proportionately consolidated cash balance (including MKIF cash balance of KRW 121bn) 2. Weighted average amortising maturity of the underlying asset level external debt3. Gearing = Proportionately consolidated MKIF Net Debt / (Proportionately consolidated MKIF Net Debt + MKIF market capital (3-month average))4. Proportionate average of operating assets. Excludes all new assets which have commenced operation in 2008 and 2009 5. Hedging (Fixed or swapped to fixed) = Proportionately consolidated MKIF net debt adjusted for fixed or swapped debt / Proportionately consolidated MKIF net debt 6. Outstanding debt balance based on amortisation schedule of asset level external debt on a proportionate equity shareholding basis. Excludes MKIF level corporate loan balance
OUTSTANDING DEBT BALANCE 6
GEARING3 49%
NET DEBT TO EBITDA4 2.7x
INTEREST RATE HEDGE5 66% until end of 2011
AMORTISING MATURITY2 8.9 years
CASH1KRW 377bn
300
600
900
1,200
1,500
1,800
2012 2017 2022 2027 2032 2037 2042
(KRW bn)
As of 30 June 2011
NV
CAPITAL RESTRUCTURING OPPORTUNITIES
Year
Conceptual Diagram
49%1
③ DELAY DEBT AMORTISATION
① REFINANCING
Gearing
Lower interest rate
Improve debt covenants
Release trapped cash
Bring forward available cash
1. Proportionately consolidated net gearing as at June 2011
Capacity to gear up further
② INCREASE GEARING ③ DELAY DEBT AMORTISATION① REFINANCING
Opportunities exist to optimise capital structure
Asset level senior debt typically have amortising debt with restrictive cash reserve covenants
Certain assets are subject to Benefit Sharing Plan where financial benefits from refinancing need to be shared with the relevant government authority
② INCREASE GEARING
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1. Composed of (i) a dividend of KRW142 per share and (ii) a distribution in excess of profits of KRW23 per share (Deduction from the retained earnings). Total of KRW 165 per share will be accounted as distribution income in calculating dividend income tax and tax payable under Korean law3
2. Based on the share price as of 30 June 2011 and 1H 2011 distribution (Annualised)
DISTRIBUTION HISTORY ( PER SHARE, POST-LISTING )
Semi-annual: As end of June and December
DECLARATION/PAYMENT
KRW 165 per share12011 INTERIM DISTRIBUTION
Higher of taxable income or 100% of distributable accounting income – to maintain tax exempt status
DISTRIBUTION FLOOR
Circa 6.8%2CASH YIELD
0
100
200
300
400
500
600
Second Half
First Half
230220200
220 220
2006 2007 2008
122
230
Stock distribution
230
2009
160
420 440
582
390
2010
160
2011
165
184
344
ON
CONCLUSION
Minimum Revenue Guarantee (MRG) provided to13 out 14 underlying assets
Currently, substantially all of operating cash receipts are MRG-backed
Underlying revenues are fully inflation-adjusted
REDUCED CAPITAL RISKS
Real and inflation-linked natural underlying revenue growth
Capital restructuring opportunities
Re-rating of assets
Growth through new investments
EMBEDDED GROWTH POTENTIAL
Sound balance sheet position
Conservative gearing with solid debt profile
Stability of operating cashflows supported by predictable cost basis
HEALTHY FINANCIALS
Global leader managing A$92 billion1 of infrastructure assets under management across 24 countries
Management fees aligned with shareholders’ interestsMACQUARIE MANAGED FUND
#1 infrastructure management and advisory platform
Unrivalled brand recognition and track record in the infrastructure space in Korea STRONG MARKET PRESENCE
1. Based on proportionate enterprise value, calculated as proportionate net debt and equity value at most recent valuation date, 31 December 2010 for the majority of assets.
APPENDICES
OP
FINANCIAL POSITION STATEMENTSNon-consolidated – as at 30 June 2011 and 31 December 2010
June 2011 December 2010
Total Assets 2,079,884 2,064,941
Invested Assets 1,858,363 1,848,587
Cash and deposits 120,606 139,365
Loans 1,120,430 1,098,823
Equity securities 617,327 610,399
Others (receivables, prepayments, etc.) 221,521 216,354
Total Liabilities 397,987 369,164
Accounts payables 1 1
Management fee payable 6,009 5,958
Long-term debts 141,500 360,551
Bond 248,889 -
Other liabilities 1,588 2,654
Total Shareholders’ Equity 1,681,897 1,695,777
Total Liabilities and Shareholders’ Equity 2,079,884 2,064,941
(Unit: KRW mn)
Asset Item 1H 2011
Busan New PortEquity 6,928
Sub Debt 28,896
Gwangju 2nd Beltway, 3-1 Senior Debt (3,668)
Soojungsan Tunnel Senior Debt (3,597)
Total 28,559
1. Excludes KRW 24mn of transaction related costs in relation to the securitisation of Baekyang Tunnel senior loan in 2008
OQ
PROFIT AND LOSS STATEMENTSNon-consolidated – 6 months to 30 June 2011 (Compared to 1H 2010)
52,33547,108Net Profit
136140Normalised EPS (KRW)5
45,18746,486Normalised Net income5
158142EPS (KRW)4
1H 2011 1H 2010
Revenue 79,199 81,157
Interest income 78,577 74,007
Gain (Loss) on sale of investment 6221 7,1482
Other Income - 2
Expense 32,091 28,822
Management fee 11,969 11,229
Interest expense 12,433 13,183
Other expenses 7,6893 4,410
(Unit: KRW mn)
1. One-off gain from 3rd tranche securitisation of interest receivables on the subordinated loan provided to Cheonan-Nonsan Expressway 2. Includes one-off gains from (i) 2nd tranche securitisation of interest receivables on the subordinated loan provided to Cheonan-Nonsan Expressway of KRW249mil and (ii) divestment of the subordinated loan
provided to Seosuwon-Osan-Pyungtaek Expressway of KRW6,899mil3. Mainly one-off transaction related expenses including KRW 5.1bil of write-down of remaining prepaid expenses from MKIF debt refinancing in 2009 4. Based on the number of shares outstanding of 331.5 mil shares5. Excludes one-off transaction related gains
OR
`^pecilt=pq^qbjbkqpNon-consolidated - 6 Months to 30 June 2011 (Compared to 1H 2010)
1H 2011 1H 2010 % Change
Cashflows from operating/investment activities:
Cash inflows from operating/investment activities 78,324 79,283 -1%
Sale of investment 20,550 29,786 -31%
Collection of other loans receivable 7,265 7,265
Interest income and other 50,509 42,232 20%
Cash outflows from operating/investment activities: (54,037) (66,220) -18%
Investments (35,824) (53,543) -33%
Fees and expenses (18,213) (12,677) 44%
Net cash provided by (used in) operating/investment activities 24,287 13,063 86%
Cashflows from financing activities:
Drawdown from long-term debts 17,943 5,000 259%
Distributions paid (60,989) (53,033) 15%
Net cash provided by (used in) financing activities (43,046) (48,033) -10%
Net increase(decrease) in cash and deposits (18,759) (34,970) -46%
Cash and deposits at beginning of the period 139,365 239,694
Cash and deposits at end of the period 120,606 204,724
(Unit: KRW mn)
OS
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1. Includes KRW 3.2bn working capital facility
MKIF COMMITMENT AND DEBT INTEREST RATE
As at 30 June 2011
(KRW bn, %)
InterestSubordinatedDebt
SeniorDebt
InterestName Abbrv. Equity Ownership (%) Rate Rate Total
Incheon International Airport Expressway NAHC 58.2 24.1 51.7 13.9 - 109.9
Baekyang Tunnel BYTL 1.2 100.0 - 1.6 15.0 2.8
Gwangju 2nd Beltway Section 3-1 KRRC 28.9 75.0 - 62.4
-
91.3
Gwangju 2nd Beltway Section 1 KBICL 13.1 100.0 35.21 20.0 142.0 190.3
Woomyunsan Tunnel WIC 10.7 36.0 9.6 - 20.3
Cheonan-Nonsan Expressway CNE 87.7 60.0 182.3 16.0 - 270.0
Soojungsan Tunnel SICL 47.1 100.0 19.3 20.0 54.0 8.5 120.4
Daegu 4th Beltway, East D4 57.5 85.0 32.0 17.0 - 89.5
Machang Bridge MCB 33.8 70.0 79.0 11.4 - 112.8
Seoul-Chuncheon Expressway SCE 48.6 15.0 87.4 11.6 - 136.0
Seoul Subway Line 9 Section 1 SM9 40.9 24.5 33.5 15.0 - 74.4
Incheon Grand Bridge IGB 74.5 41.0 89.4 11.5 163.9
Yongin–Seoul Expressway YSE 57.8 35.0 77.0 13.0 - 134.8
Busan New Port Phase 2-3 BNP 66.4 30.0 193.0 10.0 - 259.4
Total 626.4 889.4 259.9 1,775.7
Percentage (%) 35.3% 50.1% 14.6% 100.0%
10.0
20.0
-
-
-
-
7.85
-
-
-
-
-
-
-
-
OT
19.4x69%195,21710,078(4,616)14,69512.6x79%214,35217,010(4,486)21,495Machang Bridge5
(0.7x)78%(8,568)12,338(3,439)15,778(0.5x)75%(6,798)12,591(4,140)16,731Gwangju Second Beltway, Section 3-1
5.5x82%96,77217,466(3,841)21,3075.2x81%90,88417,527(4,068)21,595Woomyunsan Tunnel
3.2x84%397,170124,767(22,941)147,7092.1x86%296,966142,559(22,958)165,517Cheonan-Nonsan Expressway
2.0x92%419,151207,822(17,548)225,3701.5x90%288,752196,689(21,352)218,041Incheon International Airport Expressway
8.9x83%159,10417,856(3,568)21,4257.8x83%151,35219,323(4,077)23,400Baekyang Tunnel
(0.5x)88%(9,667)19,908(2,622)22,530(0.6x)88%(13,014)20,802(2,834)23,637Soojungsan Tunnel
3.4x85%86,50925,285(4,463)29,7482.6x85%68,685 26,919 (4,777)31,696 Proportionate average6
3.8x87%78,58620,572(3,082)23,6542.9x86%65,67222,294(3,746)26,040Daegu 4th Beltway East
(0.0x)82%(603)21,751(4,781)26,531(0.1x)78%(1,434)22,601(6,269)28,870Gwangju Second Beltway, Section 1
Net Debt to EBITDA
EBITDA margin
Net Debt4EBITDAOPEXOperating Revenue3
Net Debt to EBITDA
EBITDA margin
Net Debt4EBITDAOPEXOperating Revenue3Assets
20102 2009
lmbo^qfkd=mbocloj^k`b=_v=^ppbqN12 Months to 31 December 2010
1. Excludes all new assets which have commenced operation in 2009 and 2010 2. Management estimated, unaudited figures. Actual results may vary3. Revenue compensation and other compensations from the relevant government authority are reflected on cash basis. Payments are typically received within 6 to 18 months after the end of the year to which
they relate. 4. Excludes Shareholders loans5. MKIF’s equity ownership in Machang Bridge was 100% in 2009 and 70% in 2010 6. On a proportionate average basis based on MKIF’s equity interest in each concession company.
(Unit: KRW million)
OU
MINIMUM REVENUE GUARANTEE SUMMARY
110%90%14251425Baekyang Tunnel
120%80%14152930Incheon Grand Bridge
AssetConcession
Term Concession Term
RemainingRevenue Guarantee
Duration Revenue Guarantee Duration Remaining
Revenue Guarantee Threshold 1
Revenue Cap Threshold 1,2 Remarks
Operating asset
Gwangju 2nd Beltway, Section 1 28 18 28 18 85% 115%
Incheon International Airport Expressway 30 20 20 10 80% 110%Partial revenue sharing in excess of 80% to 110% level
Soojungsan Tunnel4 25 16 25 16 90% 110%
Daegu 4th Expressway, East 24 15 20 11 79.8% 120.2%
Cheonan-Nonsan Expressway 30 22 20 12 82% 110%Partial revenue sharing in excess of 82% to 110% level
Woomyunsan Tunnel 30 23 30 23 79%3 110%
All revenue sharing excess of 79% to 85% and excess 110%/ Partial revenue sharing excess of 90% to 110%
Gwangju 2nd Beltway, Section 3-1 30 24 30 24 90% 110%
Machang Bridge 30 27 30 27 75.78% 120%
Yongin-Seoul Expressway 5 30 28 10 8 70% 130%
Seoul-Chuncheon Expressway 5 30 28 15 13 80%/70%/60% 120%/130%/140% Change by every five year
Seoul Subway Line 9, Section 1 5 30 28 15 13 90%/80%/70% 110%/120%/130% Change by every five year
Busan New Port Phase 2-3 29 29 N/A N/A Construction asset
Weighted average6 29 24 18 13
1. % of annual concession agreement projected revenue 2. Relevant government authorities are entitled to receive the portion exceeding the Threshold3. 79% up to 2023 and 78% from 2024 to 20344. In toll revenue below 90%, Busan City Government is obliged to compensate 91.5% of the shortfall amount 5. No revenue guarantee applies if actual revenue are below 50 % of the toll revenue forecast6. Weighted by investment commitment
As of 30 June 2011
OV
Management fee calculated quarterly basis as:
Base Fee
1.25% pa falling to 1.10%1 of Net Investment Value (NIV) of MKIF; plus (+)
1.15% pa falling to 1.05%1 per annum of Commitment2 of MKIF
Performance Fee
20% sharing in cumulative total returns3 over 8% pa
Net Investment Value for any quarter equals:
The average market capitalisation of MKIF over all trading days in each calculation; plus (+)
The amount of any external borrowings by MKIF; less (-)
Cash held by MKIF
1. For NIV +Commitment in excess of KRW 1.5 trillion2. Commitments means all amounts that MKIF has firmly committed for future investment contributions.3. Total return to shareholders reflects both distributions from MKIF to its shareholders and share price performance over each calculation.
Manager’s interests aligned with shareholders
No performance – no performance fees
Underperformance carried forward
MANAGEMENT FEES
PM
MACQUARIE FUNDS GROUP
MacquarieInvestment
Management (“MIM”)
Fixed Income, Currencies and Commodities
EquitiesFunds of Funds
Macquarie Infrastructure and Real Assets (“MIRA”)
InfrastructureReal Estate
Private Equity
MacquarieSpecialised Investment
Solutions (“MSIS”)
Protected LendingFund Linked Products
Agricultural investmentsLifetime income products
Operations
Legal and Compliance
Distribution
Macquarie Funds Group ranks in the top 40 asset managers globally
1. All numbers as at 31 March 2011
A$305bnAUM1
~1,50021Staff1Countries worldwide1
PN
~105 portfolio businesses and ~120 properties1
MACQUARIE WORLDWIDE INVESTMENTS
South Africa Neotel Kelvin Power Station Bakwena Platinum Corridor N3 Toll Concessions Trans African ConcessionsNigeria Lekki Concession Company
USA Chicago Skyway Dulles Greenway Indiana Toll Road AIR-serv (tyre inflation) Harley Marine Services Icon Parking Penn Terminals Petermann (school buses) Sentient (private aviation) Smarte Carte Airport Services (fixed base operations) Total Terminals International (Hanjin Pacific Corporation)
Global Tower Partners Aquarion Company Puget Energy District Energy Duquesne Light The Gas Company Broadrock Renewables Bulk Liquid Storage Terminal Business Waste Industries
Canada AltaLink Amherstburg Solar Park Cardinal (power station) Chapais (biomass facility) Clean Power Hydro Erie Shores Wind Farm Whitecourt (biomass facility) A-25 Fraser Surrey Docks Halterm Limited (port)Mexico Decarred (highways) Oaxaca (wind farms)
UK Bristol Airport Airwave Arqiva CLP Envirogas Energy Power Resources Thames Water Wales & West Utilities M6 Toll Condor Group (ferry services) Moto (motorway services) National Car Parks Wightlink (ferry services) Red Bee Media
Belgium Brussels AirportDenmark Copenhagen Airports
China MWREF Hua Nan Expressway Changshu Xinghua Port Star King (China) Food GroupTaiwan Miaoli Windpower Hanjin Pacific Corporation (Kaohsiung) Taiwan Broadband Communications
France Compteurs Farnier
(water metering) EPR France (wind farm) RES (wind farm) Trois Sources & Lomont
Windfarms Autoroutes Paris-Rhin-
Rhône Pisto SAS (oil storage and
distribution)
Germany GWE (heat & power) Techem (submetering) Thyssengas Warnow Tunnel TanQuid (tank storage
business)
RoadsUtilities Transport & Related Services
Real Estate CommunicationsAirports Other
Spain Asset Energia Solar Solpex Energia Solar Itevelesa
(vehicle inspections)
Czech Republic Ceske RadiokomunikacePoland DCT Gdansk
(container terminal)Sweden EPR Sweden (wind farm) Varmevarden Arlanda ExpressRussia Brunswick Rail
New Zealand Metlifecare Private Lifecare Retirement Care New Zealand
Japan Hanjin Pacific Corporation (Tokyo,
Osaka)
United Arab Emirates Al Ain Industrial City Industrial City of Abu Dhabi ICAD Effluent Treatment Plant
Puerto Rico Global Tower Partners
Australia Hobart International Airport Dampier to Bunbury Natural Gas Pipeline Multinet Gas Holdings United Energy Distribution WA Gas Networks 3P Learning Regis Group (aged care) Retirement Villages Group MREEFs
South Korea West Sea Power / West Sea Water Baekyang Tunnel Cheonan-Nonsan Expressway Daegu 4th Beltway East Gwangju 2nd Beltway Section 1 Gwangju 2nd Beltway Section 3-1 Incheon Grand Bridge Incheon International Airport Expressway Machang Bridge Seoul Chuncheon Expressway Soojungsan Tunnel Woomyunsan Tunnel Yongin-Seoul Expressway Busan New Port Phase 2-3 Hanjin Pacific Corporation (ports) Seoul Subway Line 9, Section 1 C&M (cable tv) North East Chemical
India Viom Networks Adhunik Power and Natural
Resources MB Power (Madhya
Pradesh) GMR Airports (Delhi and
Hyderabad airports)
1. As at 31 March 2011. Represents portfolio businesses which Macquarie Infrastructure and Real Assets manages on behalf of investors with various direct percentage stakes held in each. Above list of portfolio businesses is not exhaustive.
PO
EXTENSIVE EXPERIENCE
PROPRIETARY DEAL FLOW
EFFECTIVE ASSET MANAGEMENT
— Since 1996, Macquarie has been a leading infrastructure and real asset manager— A$92 billion1 of assets under management across 24 countries2
— Access to the proprietary investment sourcing capability of the Macquarie Group
STRONG ALIGNMENT
— Local expertise, knowledge and relationships across 23 offices globally2
— Sector specific infrastructure operational specialists with approximately 500 years experience2
— Macquarie and staff investment of ~A$1.8 billion in Macquarie Infrastructure and Real Assets managed funds
MACQUARIE INFRASTRUCTURE AND REAL ASSETS (MIRA)’S COMPETITIVE ADVANTAGE
1. Based on proportionate enterprise value, calculated as proportionate net debt and equity value at most recent valuation date, 31 December 2010 for the majority of assets.2. As at 30 March 2011
Macquarie Infrastructure and Real Assets (previously Macquarie Capital Funds) is a leading global alternative asset manager specialising in infrastructure funds, other real asset funds and customised accounts
PP
MIRA INFRASTRUCTURE OVERVIEWExtensive experience sourcing and managing infrastructure investments
Listed
Unlisted
Listed
Unlisted
62No.
8911.6A$bAssets under management
420.6A$b
282-A$bEquity under management
974No.Portfolio businesses
24-No.Funds/vehicles
March 20111996
1. Based on proportionate enterprise value, calculated as proportionate net debt and equity value at most recent valuation date, 31 December 2010 for the majority of assets2. Listed funds – market capitalisation plus fully underwritten or committed future capital raisings. Unlisted funds – committed capital less any called capital returned to investors. Invested capital for
other MIRA businesses. For jointly managed funds, amount is representative of Macquarie’s economic ownership of the JV manager. Adjustments have been made where MIRA managed funds have invested in other MIRA managed funds.